A personal loan is one of the quickest and most preferred unsecured loans. It can help an individual tackle unexpected financial hurdle. Since it an unsecured loan the lender does not need any collateral, the processing time is short. This makes it an attractive option for those who want funds quickly. Banks, NBFCs and lending apps now offer this facility. The loan amount mainly depends on the borrower’s annual income and credit score. So, if you are looking to apply for a personal loan for the first time, here are things you need to consider:
If you want to apply for a loan, the first step is to check your credit score. You can avail of the loan only if you have a good credit score. Lenders have their own respective eligibility criteria. A credit score of above 650 for banks and above 750 for other lending institutions will help you in the process.
There are various financial institutions offering personal loans offline and online. Hence, it becomes difficult to choose the correct lender. Select the right one by comparing the interest rate, processing fees, etc. Also, select a lender that has a long and reputable standing in the market.
Loan providers offer interest rates starting from 8.45%. So, you need to do some research to calculate the total impact and EMI before taking any final decision.
If you are a credit card user, you need to check all your dues as your existing debt would be taken into consideration when you apply for your personal loan. If you have taken any other loan, you have to check your debt-to-income ratio to see if you have enough money to repay the loan.
Most lenders have their own EMI calculators which helps you to check the repayment schedule of the loan before you borrow the amount. You have to enter the amount you wish to borrow along with the interest rate and the tenure of the loan, and the system will generate your EMIs and display an amortisation table that will help you understand how much you will have to pay on a monthly basis.
Every lender has its own requirements of documents the borrower needs to submit. There is a list of documents that you need to keep ready for a personal loan. These are address proof, ID proof, income proof, bank statements, and photographs. Keep these documents handy as it will make the application process hassle-free.
Your lender will review your documents and inform you whether the application was selected or rejected. The amount of time an organisation takes to verify can vary. In some cases, you could receive a decision almost instantly while some might delay approval by a few days or even longer to arrive at a decision.
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